Economic Policy and Princeples

1. Introduction Economy of a nation defines the future of its people. It determines whether a country is going to sustain or fail. Economic growth plays a pivoted role in improving nation’s gross happiness and ameliorating the lifestyle of its people. Economic growth is defined as “The value of all the products manufactured and sold in a country of the course of one year along with everything that people do and get paid for, all that amounts to the economic growth.” (Sandford and Bradbury, 1970). When people earn more money and then buy more products and services the economy grows. Politicians also want to see the economy grow, that’s why they work towards achieving greater employment, state prices and a balance between imported and exported goods. More growth means more money. The economic growth should be achieved in a way that it must reach to the point where the economy has finally matured. The resources that industries require are limited and the need for raw materials often doesn’t take nature into account. That is why rapid or poorly planned economic growth starts to have bad impact on quality of life, that’s why countries like Germany, Bhutan etc. plan their economic policy keeping in mind about nature’s safety and gross domestic happiness (Rodrik, 1996).

2. Economic Policy An economic policy is a very complicated area but it can be categorized into following major areas 1) Fiscal Policy: which refers to government’s budget. In other words, it deals with the revenue or the spending in the form of taxes etc. 2) Monetary Policy: which refers to getting interest rates and buying and selling funds in the market. It is done in a manner to influence the amount of money which is available in the economy. 3) Trade Policy: which refers to the setting of tariffs, trade barriers for certain products or goods. 4) Regulatory Policy: which…...

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